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For
Immediate Release Contact: Betsy Hart
July 30, 2008 (202) 226-8555
HERSETH
SANDLIN, FORTENBERRY INTRODUCE BIPARTISAN LEGISLATION TO ENCOURAGE COMMUNITY
WIND DEVELOPMENT
Bill
Helps Producers Become Part of New Energy Economy through Locally-Based
Renewable Energy Projects
Washington,
DC July 30, 2008 –This
week, Representatives Stephanie Herseth Sandlin (D-SD) and Jeff Fortenberry
(R-NE) introduced legislation to help spur the growth of locally-based
renewable energy projects in rural America. Their bill, The Rural Energy
Equity Act, supports entrepreneurs looking to provide renewable sources
of energy to power their communities, and encourages corporate investment
in these smaller, locally-based and owned projects. The legislation
removes a key obstacle to funding these projects through the Rural Energy
for America Program, or REAP grants, which can be a critical source
of start-up funding for community renewable energy projects. Wind energy
projects, in particular, would benefit from this legislation.
“As America works to diversify its energy portfolio, we need to be doing
everything we can to ensure that innovative entrepreneurs in rural America
have the tools they need to be a part of the new energy economy,” Rep.
Herseth Sandlin said. “Wind energy in particular is the great untapped
resource across a large swath of this country, and this bill will help
us expand wind energy projects in a way that bolsters economic development
in rural America.”
“Wind energy can help create a more sustainable energy future for America,”
Rep. Fortenberry said. “Public policy can play an important role in
encouraging wind power development and other renewable energy projects.
This legislation makes construction of wind projects easier by repairing
an inequity in the income tax code.”
Current tax rules undercut the value of Farm Bill grants and loan guarantees
for community wind and other locally-based energy projects. That’s because
two critical funding programs – REAP and the federal Production Tax
Credit (PTC) - conflict. Farmers can use the Farm Bill’s REAP to build
wind power projects to help power their communities. The farmers often
partner with wind developers or other corporate partners to help finance
the projects. These corporate partners (who aren’t themselves eligible
for REAP grants) have their own incentive to invest in these projects
– the federal Production Tax Credit (PTC), which can generate over $500,000
in tax credits per installed megawatt (MW) of wind power during the
10 year PTC eligibility period. (A typical community wind project is
5 to 20 MW, and they continue to grow in size.)
Unfortunately, current PTC rules reduce the value of the REAP grant
by as much as 50 percent. That has several negative consequences: it
reduces the capital investment that local investors can bring to the
project, lowers the value of the PTC credit to the corporate investor
(and therefore reduces the project’s financial returns), and delays
the time at which project ownership “flips” from the corporate developer
back to the local owners.
The Rural Energy Equity Act would solve these problems and encourage
investment in locally-based energy projects by exempting REAP grants
from the PTC offset. This would ensure that REAP grant recipients receive
the entire grant amount to which they are entitled and inspire corporate
investment in locally-based community energy projects.
Herseth Sandlin added “Currently, entrepreneurs who seek to provide
a renewable source of energy for their communities are unfairly penalized
for seeking corporate partners in helping to get local energy projects
off the ground. The Rural Energy Equity Act ensures that innovators
at the local level as well as their corporate investors are provided
with incentives to develop alternative sources of power that will help
our country move toward greater energy security.”
“We applaud Congresswoman Herseth Sandlin and Congressman Fortenberry
for righting a wrong that Congress didn’t intend,” said Howard Learner,
Executive Director of the Environmental Law & Policy Center, a leading
environmental organization with offices in Sioux Falls and elsewhere
in the Midwest and Great Plains. “Current tax law penalizes those who
use the REAP program to help finance community wind power projects.
This bill eliminates that unfairness and will help jump-start new locally-based
wind projects throughout South Dakota, Nebraska and the rest of the
country.”
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Congresswoman
Stephanie Herseth Sandlin serves South Dakota in the U.S. House of Representatives.
She is a member of the Blue Dog Coalition, a group of moderate Democrats
committed to fiscal discipline and strong national security, and is
co-chair of the Rural Working Group, which is dedicated to raising the
profile of issues important to rural America. She also serves on three
committees vital to South Dakota’s interests: Agriculture, Veterans’
Affairs and Natural Resources. In the 110th Congress, Rep. Herseth Sandlin
was one of only 15 members appointed to serve on the Select Committee
on Energy Independence and Global Warming.
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